Summary

  • Red Hat announced a deal in September 2004 for Netscape Directory Server and Certificate Management System. The asset agreement was signed on 29 September; Red Hat's filing records completion on 7 December for $20.5 million cash, with another $2.5 million contingent on customer orders.
  • The contract transferred specified software and related assets while Netscape and AOL kept their patent and trademark assets under separate licence arrangements. In June 2005 Red Hat said Directory Server code was available under the GPL and offered the product by annual subscription; it described open sourcing other acquired technologies as work still to come.

The deal arrived in September. The code arrived in installments. In a 30 September 2004 announcement, Red Hat named two targets from AOL's Netscape Security Solutions unit: a directory server for user profiles, groups, policies and access control, and a certificate system for digital identity. It said it planned to market the products over the next six to twelve months. The announcement described a destination, while its customers still needed an actual product, a licence and someone to maintain it.

The asset purchase agreement dated 29 September shows why a purchase could not be treated as a magic handover of everything carrying the Netscape name. Section 1.2 covered intellectual property embodied in the customer deliverables and other property used exclusively by the security business, subject to stated exclusions. The document's definition of intellectual property reached beyond executable code to build scripts, bug reports, test plans, translations and technical documentation. Those materials could make a continuing product possible. A source tree alone would leave an incoming maintainer with many unanswered questions.

Then the contract drew lines around the assets that stayed put. Section 1.3 excluded Netscape and AOL patent and trademark assets. The closing documents called for separate patent and trademark licences. A brand name, a patent and the copyright in code followed different paths even though the press release placed them under one familiar business label. The transaction was a sale of specified assets, with retained rights and contracted permissions, rather than a purchase of Netscape Communications as a whole.

Time was a separate boundary. The September press release said Red Hat had entered into an agreement. Its later quarterly filing states the purchase closed on 7 December 2004 for $20.5 million cash. Another $2.5 million depended on qualifying customer orders by 30 April 2005. The 2005 product announcement loosely calls the assets acquired in September; the filing pins down when the transaction was completed. One date marked commitment, another transfer, and a third would mark a usable release.

That third date came with an uneven result. Red Hat's 1 June 2005 Directory Server announcement said the once-proprietary Directory Server code was then available as open source under the GPL. Red Hat also sponsored a Fedora Directory Server project. The commercial version was described as an annual subscription with maintenance, support and upgrades, with purchase availability projected for mid-June. Open code and paid operational support stood side by side on the same product page. The customer could inspect the code; Red Hat could still charge to keep a deployed directory working.

The release treated the other half of the 2004 purchase differently. Red Hat said it expected to open source additional technologies acquired from AOL/Netscape in the coming months. The Certificate Management System was in the acquired package, but that sentence placed further code release ahead of the company, not behind it. An operator evaluating the identity stack in June 2005 had a released directory-server source base and a promise about additional technology. The two receipts were different.

There was a practical reason to count those receipts carefully. A directory server stores the people, groups and rules that other applications use to decide who gets in. The 2004 announcement said AOL itself ran the directory server within its organisation. Moving such software from one owner to another requires code and documentation, but also a credible route for maintenance and customer contracts. Opening the source makes inspection and independent development possible. A support subscription turns responsibility for updates into something an operator can buy.

Neither step happens just because a headline says an acquisition has been signed.

Red Hat's purchase made the old Netscape enterprise code a new asset. The contract divided rights; the closing moved specified assets; the Directory Server release gave customers a GPL code base and a paid support route. The company sold the prospect of an open security stack in September 2004. By June 2005 one component had crossed that line in public. The paperwork had run first; the software followed at its own pace.

Original records